General rule
If the taxpayer fails to substantially comply with any formal document request arising out of the examination of the tax treatment of any item (hereinafter in this section referred to as the “examined item”) before the 90th day after the date of the mailing of such request on motion by the Secretary, any court having jurisdiction of a civil proceeding in which the tax treatment of the examined item is an issue shall prohibit the introduction by the taxpayer of any foreign-based documentation covered by such request.
Reasonable cause exception
In general
Subsection (a) shall not apply with respect to any documentation if the taxpayer establishes that the failure to provide the documentation as requested by the Secretary is due to reasonable cause.
Foreign nondisclosure law not reasonable cause
For purposes of paragraph (1), the fact that a foreign jurisdiction would impose a civil or criminal penalty on the taxpayer (or any other person) for disclosing the requested documentation is not reasonable cause.
Formal document request
Formal document request
Proceeding to quash
In general
Notwithstanding any other law or rule of law, any person to whom a formal document request is mailed shall have the right to begin a proceeding to quash such request not later than the 90th day after the day such request was mailed. In any such proceeding, the Secretary may seek to compel compliance with such request.
Jurisdiction
The United States district court for the district in which the person (to whom the formal document request is mailed) resides or is found shall have jurisdiction to hear any proceeding brought under subparagraph (A). An order denying the petition shall be deemed a final order which may be appealed.
Suspension of 90-day period
The running of the 90-day period referred to in subsection (a) shall be suspended during any period during which a proceeding brought under subparagraph (A) is pending.
Definitions and special rules
Foreign-based documentation
The term “foreign-based documentation” means any documentation which is outside the United States and which may be relevant or material to the tax treatment of the examined item.
Documentation
The term “documentation” includes books and records.
Authority to extend 90-day period
The Secretary, and any court having jurisdiction over a proceeding under subsection (c)(2), may extend the 90-day period referred to in subsection (a).
Suspension of statute of limitations
If any person takes any action as provided in subsection (c)(2), the running of any period of limitations under section 6501 (relating to the assessment and collection of tax) or under section 6531 (relating to criminal prosecutions) with respect to such person shall be suspended for the period during which the proceeding under such subsection, and appeals therein, are pending.
Pub. L. 97–248, title III, § 337(a)96 Stat. 629 Pub. L. 98–369, div. A, title VII, § 714(k)98 Stat. 963 (Added , , ; amended , , .)
Editorial Notes
Amendments
Pub. L. 98–3691984—Subsec. (d)(3), (4). redesignated par. (4) as (3) and struck out former par. (3) which provided that an item was to be treated as foreign connected if directly or indirectly from a source outside the United States, or the item (in whole or in part) purported to arise outside the United States, or was otherwise dependent on transactions occurring outside the United States.
Statutory Notes and Related Subsidiaries
Effective Date of 1984 Amendment
Pub. L. 98–369Pub. L. 97–248section 715 of Pub. L. 98–369section 31 of this titleAmendment by effective as if included in the provision of the Tax Equity and Fiscal Responsibility Act of 1982, , to which such amendment relates, see , set out as a note under .
Effective Date
Pub. L. 97–248, title III, § 337(c)96 Stat. 630 Pub. L. 99–514, § 2100 Stat. 2095